DOWNSIDE RISKS:
The economics ministry expects a key gauge to fall again this month and said that it is monitoring factors including Russia’s invasion of Ukraine
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By Lisa Wang / Staff reporter
The nation’s industrial production index last month shrank 4.8 percent from a year earlier, snapping a 31-month growth streak, as mounting concerns over risk of a global recession curtailed demand for a wide range of products.
The concerns weighed on demand for products ranging from notebook computers, mobile phones and TVs to steel, adding to already gloomy sentiment amid supply chain inventory corrections.
The manufacturing production sub-index, the major contributor to the nation’s industrial output, dropped 4.83 percent year-on-year, its first decline since February 2020.
Photo: Ritchie B. Tongo, EPA-EFE
As the nation’s economy faces mounting downside risks, the Ministry of Economic Affairs expects the manufacturing production sub-index to fall again this month at an annual rate of 2 to 5 percent.
Soaring global inflation, Russia’s invasion of Ukraine and China’s “zero COVID-19” policy are among multiple factors the ministry is closely tracking, it said.
The ministry still expects the manufacturing production sub-index to grow by the end of the year, Department of Statistics Deputy Director-General Huang Wei-jie (黃偉傑) said by telephone.
In the first nine months of this year, the manufacturing gauge remained in positive territory, up 3.38 percent annually, he said.
“The weakness in traditional industries spread to the electronic component [sub-index] last month, with the LCD segment suffering a deeper decline of 55 percent annually,” Huang said. “The severe slump in LCD production has eaten away the expansion of semiconductors.”
The production of electronic components fell 2.97 percent last month, ending 34 straight months of growth.
Semiconductor production gained 5.93 percent from a year earlier on the back of robust demand for 12-inch wafers ahead of new product launches by global smartphone brands, the ministry said.
Strong auto chip demand also helped, it added.
The production of computers and other electronics soared 20.16 percent year-on-year, thanks to resilient demand for servers, high-performance computing applications and networking devices such as routers.
The increase bucked the broader downtrend and was helped by production lines returning to Taiwan, Huang said.
Production in the petrochemical sector sank 23.82 percent year-on-year, due mainly to sagging consumer spending and persistent inventory adjustments.
Some manufacturers also shut down equipment for early annual maintenance, with the aim of reducing capacity, the ministry said.
The production of basic metals plunged 22.81 percent annually, as major steelmakers strategically reduced production to cope with shrinking demand as customers continued to digest inventory, it said.
Production in the machinery sector contracted 4.67 percent year-on-year. The ministry attributed the decline to a slowing global economy and excessive inventory.
The production of vehicles and auto components increased 7.78 percent, benefiting from strong domestic demand for sedans and mini trucks after new models hit the market.
A shortage of key components has also been reversing, the ministry said.
The growth is expected to carry into this month, Huang said.
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